COFCO Sugar (600737) In-Depth Report: Taking advantage of the trend to meet the new cycle of sugar growth

The report guide predicts that the global sugar supply and demand will change from excess to insufficient in the 2019/20 crushing season, with a gap of 200 seconds. 2019 is a switch in the price of bulls and bears, opening a new turning point in the growth cycle.The upward elasticity of self-produced sugar production is expected to lead to a resonance in sugar prices.

Investment key industries: The main producing countries have entered a production reduction cycle, and sugar prices may be welcoming a bottom reversal. The sugar production of the three major producing countries in the 2018/19 crushing season has fallen, and it is expected that production will decline in central and southern Brazil26.

5%, India cuts production 3.

1%, Thailand cuts production by 2.

7%.

According to the latest ISO forecast, the global sugar market oversupply in the 2018/19 crushing season will narrow to 64 inches, lower than the 217 substitution and 675 forecast in November and August last year.

It is expected that the global sugar supply and demand will change from excess to insufficient in the 2019/20 season, with a gap of up to 200 tons. Therefore, 2019 is a switch in the price of sugar and bears, starting a turning point in a new round of extension cycle. The domestic sugar price is supported by cost support and internal and external linkage.It will also rise. It is expected that the domestic sugar price will reach a peak of 6,000 yuan / ton in 2019.

中粮糖业:聚焦食糖主业,打造世界一流糖商中粮糖业的食糖业务包括自产糖,贸易糖,炼糖3大块,产能分别为95,200,150吨,2018年 年糖业收入The gross profit ratio was 89% and 81%, respectively.

In terms of self-produced sugar, the company is a well-deserved domestic sugar leader: 1. In terms of scale, the company’s annual production and sales of sugar reaches millions of tons, which is much higher than listed companies in the same industry, and the scale of its sugar business revenue exceeds 20 billion; 2., The company’s gross profit margin for sugar making in 2018 (16.

71%) and ROE (6.

87%) is also much higher than the listed companies in the same industry; 3. From a cyclical perspective, the homemade sugar business of the company whose sugar prices go down can still be profitable, and the homemade sugar business of which the sugar price goes up provides upward flexibility for the company’s performance.

In terms of trading sugar, the spread between the external and internal sugar prices has widened, and the company ‘s trading sugar business has increased profitability, partially replacing the profit growth of the homemade sugar business. It has gradually and smoothly smoothed the change in the cycle to ensure the company ‘s profitability and stability.

In terms of sugar refining, the company ‘s port sugar refining business has a capacity utilization rate of 57%. It has made room for breakthroughs and the conversion of sugar prices has increased.

Earnings forecast and forecast It is estimated that the average price of sugar and ketchup will be on the upward channel in 2019, and the company 杭州夜网论坛 is expected to usher in volume and price.
In 2020, the EPS will be 0.

32, 0.

45 yuan, corresponding to the current expected PE is 34, 25 times, we are optimistic about the company’s performance elasticity in the context of sugar price growth, and give a “buy” rating.

Risk reminders: sugar prices are not up to expectations; oil prices have fallen sharply; sugar production has increased significantly; policy risks.